John Malone’s Liberty Global, Vodafone Combine Dutch Businesses

After months of on-again/off-again talks, Vodafone and John Malone’s Liberty Global international cable operator have reached a deal to merge their operating businesses in the Netherlands in a 50-50 joint venture.

Under the terms of the pact, Vodafone — the world’s second-largest wireless carrier after China Mobile — will pay about $1.1 billion (€1 billion) to Liberty Global to equalize ownership stakes in the JV. The new entity will operate under both Vodafone and Ziggo brands, with 15 million customers including 4.2 million video, 3.2 million high-speed broadband, 2.6 million fixed-line telephony and 5.3 million mobile users.

“This powerful combination of the best fixed and mobile networks in the Netherlands will deliver huge benefits to Dutch consumers and businesses,” Liberty Global CEO Mike Fries said in announcing the pact Monday.

Europe-focused Liberty Global acquired Dutch cable operator Ziggo in 2014; Ziggo was valued at more than $13 billion at the time. Vodafone and Liberty Global said they have agreed to not sell their interests in the JV until the fourth anniversary of closing.

The deal is expected to close around the end of 2016, subject to regulatory approvals. According to Liberty Global, the joint venture has an estimated net present value of approximately $3.9 billion (€3.5 billion) after integration costs.

Talks between Vodafone and Liberty Global about a potential asset swap emerged last year, but Vodafone last fall said it had ended those negotiations.

For the 12 months ended Dec. 31, 2015, Ziggo (including the Sport1 network) incurred a pre-tax loss of about $540 million (€485 million), as customers declined by 203,000.

Also Monday, Liberty Global reported fourth-quarter 2015 results. The company generated $18.3 billion in revenue for full-year 2015, down 0.2% from the year prior, and operating profit of $2.3 billion, up 5%.

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